Welcome to Nomad Capitalists Live 2024 in Kuala Lumpur, KL, Malaysia.
I'm Bob Henderson. I'm the Nomad Dad thrilled to be joined by Vussi Timbekwaiu. Vussi,
welcome to Nomad Capitalists Live. Yeah, hi Bob. Thanks for having us. Love your outfit.
You like it, eh? I had you in mind when I filmed this this morning.
You're from South Africa. I am. And you're a young man.
I'm from the beautiful land of the country in the southernmost tip of the most incredible
continent in the world. And you have done some terrific things in a very short period of time?
I don't know. I think God has been good. I think we've been very blessed.
So, tell us about you. What can I tell you? So, I come from South Africa when we first
started our firm Purely Coincidental. I had been an investor on a show called Dragon's Den,
the original format owned by Sony in the US. You have a similar show called Shark Tank.
And I'd been running a consulting firm. I had exited that consulting firm,
had a little bit of liquidity and went and did these deals. And somebody said, you know,
you should roll this up into like a structure, maybe start a fund. And I was like,
would that work? And that kind of started us off on this incredible journey. So,
when we first started, we were... And that would have been when?
That would have been circa 2014. Okay, so 10 years.
About 10 years. And so then we started. We started in all earnestness.
And when we started initially, we were purely focused on South Africa.
We then started looking at expanding our horizons. I think, you know, just for context,
my vantage point is that because I traveled a lot of work globally and my network is global,
one of the challenges we have, Bob, in attracting capital to the part of the world I'm from,
is that the opportunity set is just too small to give you a seat around the table.
And so, if you're meeting with an institutional investor anywhere in, you know,
Northern Hemisphere for a conversation less than $50 million, this is not worth their time.
And for us, $50 million is a very large fund with multiple assets across different geographies.
And so there's kind of this need to create... You would understand that an instrument large
enough that it can attract the capital at volume and deploy that capital at volume,
but also with sufficient guardrails in place that it can actually manage that capital.
And so we're on the path, we think, to building something like this.
And we're very excited by the opportunity set.
Sir, entrepreneur?
Yes, sir.
Investor?
Yes, sir.
Mentor?
Yeah, I try.
Consultant to Fortune 500 companies?
That's right, yeah. So I first started... You know, my journey has been interesting
because I came from kind of outside the space into the space.
So I started public speaking when I was at school, then I was competing in public speaking,
and then I won a number of international competitions and then got to travel
and live all over the world, which really changes your perspective.
And as a South African, it's something about which I'm very acutely aware,
is that my vantage point is framed by the fact that I have had unbelievable international exposure
at a very early age.
So I was living in Australia and Sydney at 17 in 2002, I'd been to the UK,
I'd been all over the world.
So my world kind of really changed from that perspective.
And so when I started working as a professional, I already had a public speaking career,
and I kind of built those two in tandem.
And it's been a very interesting journey to have an international perspective and
a vantage point, but also try to build yourself out as a professional in a particular space.
Why is it that Nelson Mandela had good things to say about you?
What is it that you did that impressed him so much?
Yeah, so I had just come back from an international public speaking competition,
had won Audience Favorite Speaker Prize, won the competition,
and then had the unbelievable privilege of meeting him.
He'd heard about my winning this competition.
Admittedly, I was much younger, then had more hair and a slightly thinner waist.
And the newspapers had covered my story.
And for the viewers watching this, the context of the story is important because
we had come from apartheid.
Nobody who looked like me, who came from where I came from,
had ventured into public speaking at an international level
and competed in one at that level.
And so when I did do, this was covered by almost all of the press across South Africa,
both print, television, radio across the spectrum.
And I suppose he must have come upon this.
And he'd penned a letter and addressed the letter and I got invited to meet him.
And then, of course, I went to meet him.
And it was just the most unbelievable opportunity in exchange.
I often say to people who ask me, how was that?
And I say, he literally had the ability to bend the laws of physics.
He would walk into this room and the temperature would change.
It would drop just that one and a half degrees.
There are a few people like that, but not many.
100%.
And strong, strong character.
He had a presence about him.
If he sat next to you, you could feel his energy and feel his aura.
I was a kid at the time, but even then I could feel that transmission of energy.
And I think the world today is solely in need of leaders of that caliber
who are able to step up and to do and say the things that are unpopular
but are necessary for where the world is
and for what we hope the world can deliver for future generations.
Well, tell me about South Africa today.
What's the state of affairs?
So I like to think of myself as a person who's able to look at,
as Jim Collins says, face the brutal facts.
And I think if you look at the brutal facts,
we have an economy that hasn't delivered the rates of growth
that it has the potential to deliver.
So for instance, over the past quarter, economy grew 0.4%
in a like-for-like basis year on year,
which is very poor for us over the past decade.
Our economy has grown at less than 1% per year.
Of course, you've got to ring fence the numbers around COVID
because there was a massive drop in and then a massive spike up.
But if you normalize for that period,
we've had a sub 1% economic GDP growth rate.
And all that stall speed.
I mean, you've got to consider that our population, Kegar,
I think is at about 1.6% the last time I checked.
So you've got a population growing at a rate faster than the economy.
Then if you look at the other macro factors,
the largest part of our demography is young people.
And we have an unemployment rate of young people
well above 42%.
The unemployment rate in the country by the broad definition,
which for us includes people who've given up looking for work as above 40%.
The unemployment rate by the narrow definition is above 30%.
And to put that in context,
when Hitler seized power in Germany,
the unemployment rate was just nearing that 20% mark,
I think just marginally over.
So we have been teetering on the brink of playing
with some very, very dangerous macroeconomic factors.
In addition to this disenfranchised youth,
the lack of work, lack of job opportunities,
porous borders, lots of immigration into the country.
From where?
From different parts of the continent,
driven in part by a lot of the geopolitical issues
in some of our neighboring countries.
So for instance, the issues around Zimbabwe
are well known and well ventilated.
So you've got Zimbabwe, you've had Mozambique,
which had its own period of economic difficulty before that,
had its own period of unrest.
And a lot of that drives economic activity.
Johannesburg still is the hub of the continent,
and that nobody tell you different.
I don't have the numbers off hand,
but I read somewhere that if you just took Hauke,
which is the province in which Johannesburg is based,
and you benchmarked it against other countries in the continent,
it would still be somewhere in the top 10.
And I might be wrong on the exact number,
but it's somewhere high up there,
which is to say that even without the instances
of geopolitical unrest,
the economic opportunities in Johannesburg alone
attract a lot of migrant labor.
And so all of this feeds a country that is having difficulties,
because you've got young people who come,
I am in my family, what we call a first generation.
So first generation means first university,
probably first to start a formal business,
first, first, first, first, first.
I am that in my family, and I'm no exception.
There are millions like me aren't there, right?
And yet not all of us are given the same opportunities
and pathways that I have been given.
So you have this economy that's not growing,
you then have migrant labor coming into the country,
some are documented, some undocumented,
finding its way into the labor market,
and you can begin to see how this creates attention
in society broadly.
And then you add in addition to this the fiscal picture,
just you've got to have a look at the books,
the government has been running,
and now they're in this program of constraining fiscal spending,
cutting budgeting, the other day the education minister announced
that they're cutting spending in the education sector.
She estimates that they will be in a position
where they'll have to let some teachers go,
which is not good if you look at our public education system
because it's already overburdened in our public education system.
And so the fiscal picture doesn't look good
because you've got an economy that's not growing,
a balance sheet that is not growing from a fiscal perspective,
and then of course they've enacted a national health insurance.
And I want to be clear, I'm a believer in the free market.
There's no such thing as a pure free market.
I think none of us who operate in the free market system
can ever say, well, this market is so pure,
but I'm a believer that the freer markets are
the better the opportunities people have to succeed.
And ideologically, that isn't quite where South Africa's zeitgeist is.
There's still a huge overhang of kind of that socialist conversation.
And that drives, so you add all of these factors together
and you begin to see the bubbling under the surface.
Well, how did this come about?
There's 40% unemployment and all the problems that you've discussed.
How does this come about?
Frankly, you point out that the unemployment rate was half of that
when Hitler came to power.
I think in the Great Depression,
the highest unemployment rate in the U.S. was 28%.
Well, that's right, yeah.
My goodness, 42% is just way over the top.
It really is.
And there are some statisticians who are of the view
that that number is still not an accurate reflection
of what the realities on the ground are.
But your question is quite pointed.
How did it come about?
And the difficulty, you'd be well versed in this, Bob,
is the difficulty with the modern day
is we have this tendency to simplify complex issues.
This is a really complex issue.
So there is a large part of it that is the apartheid overhang.
The apartheid system was designed on an exclusionary framework and system.
Here's how it worked and I'll give you the 15-second breakdown.
Now go a little longer if you want.
I'm not sure everybody understands how it worked.
Because the people like me who looked like me
and came from where I came from operated in an environment
where by law there were certain things we were not able to do
and certain jobs we were not able to have.
And so this is in part why I'm saying in my family
I would be the first person to reach a certain level of education.
Because even though there might not have been a law saying,
if you are black, you can't, the system was such
that it was as near as makes no difference
impossible for you to reach that level of education
in the first place.
And so the system of apartheid, apartheid
is the direct translation into the English,
was that there was an economy for white people in South Africa
and then an economy for the rest of the peoples of South Africa,
the majority of which over 70% is black African, which I am.
Then we have what we call Indians and coloreds
who are a different race designate.
But the economy was built in large part
to support only this population of white people.
And so the rest of us then kind of functioned
in other parts of the economic system.
But predominantly my people, black African people,
were the cheap labor into the economic system
to get this economy to grow.
And so that's the overhang.
The missed opportunity is the government in power
has had 30 years to really do meaningful transformation
of this economy.
This is to transform your network industries,
build new infrastructure, bring a lot of investment
into the country, modernize the economy.
And in large part has missed that opportunity for several reasons.
And again, complex, but for several reasons.
One, self-interest, right?
When you are a party as powerful as the incumbent was,
I mean, at a point in time there were close on 70% of the vote.
When you're that powerful,
there just isn't a lot of incentive for you
to transform and to change because your competitors,
you know this in business.
If you're 70% of market share and then, you know,
the other 30 players are the remaining 30%.
You tend to approach things very, very differently.
And so one of the things that's shifting now
is they have had a steady decline
over the most recent election, the sharpest decline.
The governing party went from 57% of the vote
to 40% of the vote, shedding 17%.
You think in business terms of their market share
over a single five-year period is a marked difference.
This changes the complexion
because now that they're at 40%,
they're having to work with other parties
to govern the country.
And those of us who are, and I always say to people,
I don't care about the politics, I care about the people.
And we just get the country to work.
And we can differ in how we get there,
but let's agree on what there is.
Let's agree on the destination.
What's the destination?
You want a country that works, that is safe,
we still have a massive crime problem.
My own father was murdered when I was 13 years old.
They never caught the killers.
The docket was opened twice and lost twice
because of the third issue, which is the corruption issue.
And then you add on top of this,
all these are the fiscal issues.
It's quite a dire picture.
Yet in the midst of this,
I still come from the country that birthed Elon Musk.
I come from the country that created Mark Shuttleworth.
So we're still that people, we're still that country.
And I think it's important,
I'd certainly take it as a responsibility, Bob, wherever I am,
to try and present the real picture,
but also present the balanced picture.
The balanced picture is,
there's still huge upside, massive opportunity.
If you're looking to be a long-term player,
whose feet and hands are on the ground,
doing the actual work, building with builders,
we have a fantastic country and an economy.
We still fantastic road network.
We have ports, they work now.
We had a recent issue with the ports.
We're not working and functioning optimally.
We have a fantastic banking system, great legal framework.
And in my country, it still holds true
that if you and I have a commercial disagreement
and I sue you,
the courts will actually hear the matter
and the judgment will hold.
And there are many countries in the world
for which that is just not the case.
So there's a lot working for us.
So the infrastructure is there.
Well, the infrastructure is definitely in place.
This is why I said,
I spoke about this lost opportunity of 30 years
because the base infrastructure was really was there.
And one hopes that this new spark,
this new wave of optimism
is going to reignite the country in the right direction.
So Africa needs at the very least a 2% economic growth rate,
GDP sustained over a period of 10 years
to have any meaningful impact
of drawing people into the labor market
and beginning to reduce that unemployment rate.
That's the first thing it needs.
Second thing it needs
is to become very intentional about migration
and about controlled migration.
And to be clear, I'm not saying shut the borders
but I am saying I am a global citizen.
That's why I'm a nomad capitalist.
But there is nowhere in the world I am
where I am not there without the proper documentation.
And I don't know when it happened to Bob
that saying to people,
you can be here but follow the process
became a politically volatile point.
This is, otherwise,
what's the purpose of having the law then?
Yeah, no longer a country if you don't have borders.
100%.
So if we, I think if we get those simple basics in place,
we would be on a home run.
Well, what do you do about education?
I mean, that is critically important.
How do you turn that around?
Does it get privatized?
Sure, Bob, you know your stuff, right?
So here is the difficulty.
If you understand the demographic picture
that I've painted for you,
you understand the historic injustices
suffered by a large part of the population,
that also means that they don't have the economic means
to afford privatized education.
Now the state in South Africa says it is law
that your children must receive an education.
It's legislated in the Bill of Rights.
So you must get an education.
The difficulty is that,
and there are many pundits about this
in different points of views,
but for those of us who track the data,
the difficulty is that public,
that the education levels of public education institutions
has a long way to go still.
And so what we've seen more recently
has been an emergence of a number of private education players
who've been stepping into the breach
and filling that gap predominantly for the middle class.
The large part of which it must be said
has been a black middle class that's like myself,
who've come from spaces where we are not middle class
and can afford to not now be in the middle classes.
And so there's been a provision of that.
But you must understand that socialist ideological overhang
because every time this happens,
what happens is there begins a conversation
in the political quarters
that says private interest seems to be making an impact there.
We need to stop that.
And it's happened in the health system.
And my view is that it might likely happen
in the education system too, right?
Where you find a state with respect
that hasn't proven itself all that competent
at running a particular thing,
now thinking it can run the whole thing
and even take it away from private interest.
So education is fundamental
and reducing the cost of education is fundamental.
My view is you reduce the cost of funding of education
by deregulating the market,
by opening up for more players to operate in that space,
by making it easier for people to do online education
and all of those kind of educational technology platforms
easier to operate in the space.
And that if you do this,
you know, it's the rising tide is elevating all ships.
If you drive supply,
then the demand is fixed and the price will drop.
It isn't the inverse.
And I think there'll be a bit of an ideological debate
in the country at the moment
about what's the way to go.
I hate to be so morbid.
Sorry about that.
In the US, I think a big problem is this victimhood society.
Now you talk about injustices there
and obviously you're right about that.
Is there a victimhood mentality today in South Africa
which may be holding back a segment of the population?
You know, one of the difficulties is that
it's a real lived injustice for a lot of people.
So I don't, my view isn't necessarily that
it is the victimhood of the citizen.
I think my view is it's who it is
against which the citizens must hold that state responsible, right?
So, and my view again is after a particular period,
you've got to begin to look in the mirror and say,
look, we might not like where we are,
but perhaps we need to start looking at
who's responsible for us being where we are.
So that's the first thing to say.
The second thing to say is we do have quite a way to go
in terms of re-educating a large part of the population
around not only personal responsibility,
which I think is well-weaved into the system,
but more importantly around how we can think of ourselves
as global citizens because I think that's a big,
big, big missing part for us in the conversation piece.
But this, you know, this victimhood, as you call it,
it's something all of us have to begin to straddle
and to struggle with.
And so I'm often on opposite ends and opposing ends
with people who come from that particular perspective.
And I try to meet them halfway.
And one of the things I say is, listen,
I understand why you say what you say
and why you feel the way you feel.
And I completely empathize because,
actually, I have been where you are.
I get it.
But let's agree on who's responsible
for your being where you are
before we can talk about how you get out of where you are.
Where I think South Africa is different
is that there is only a certain amount of the blame
you can apportion to who was responsible pre-94.
And then a particular amount of the blame
you must apportion for who's been responsible after that.
It's a controversial point of view.
It's a point of view about which,
particularly on social media, I've taken a lot of heat.
But it's a point of view that I hold.
It's my point of view is study other parts of the world
that have transformed themselves.
We're here today.
We had an entire session talking about emerging markets.
And if you look at other emerging markets all over the world,
you realize that 30 years is sufficient time
for a government in power that has been intentional
to have made a marked difference in the lives of its citizens.
So we can't let those in charge escape that responsibility.
Well, you heard my talk.
I did, yeah, I really enjoyed it.
I brought a chart.
And I focused on four countries.
Two great situations.
And two not great situations.
So the great situations were Poland,
which was a communist country.
So this was a chart showing GDP back to 1998.
25 years, one generation.
And it's been straight up.
But they have all the disadvantages coming in
because they were a communist nation.
And look what they've done.
It can be done.
Estonia was another one.
Not quite as good, but still pretty darn good.
They weren't as oppressed,
but they did answer to Moscow
in the Cold War era.
And the other two were rich nations that blew it.
Argentina and Venezuela.
Venezuela, yeah.
So, you know, a little hubris in those cases.
So the point is, it can be done,
but people have to change the mindset, I would think.
And it seems to me that's your big challenge.
Yeah.
I mean, I think you've absolutely nailed it.
Now, here's the thing.
And I could be criticized for making a racial comment
because let's be honest,
Estonia and Poland are primarily whites.
Whites.
And so to say that, you know,
a country that's predominantly black
would take on the things that you discussed,
my personal responsibility,
and looking in the mirror and saying,
well, I have the ability to change this,
that that might be racist.
I'm imposing my white supremacy values on,
well, how would you respond to that?
I mean, it works.
What they did, and you told me,
you just want to see what works.
That's what you want to see happen.
I think.
Is that the wrong approach?
You know, one of the fallacies you learn
in classical public speaking and debating
is you're taught that just because you present statistics
and data and facts,
doesn't mean people will change their minds
because some people are really committed.
They're dug in, they're healed.
That's right.
They're just committed to a particular point of view.
It doesn't matter what the facts say.
And so the narrative,
and so for them, this is my narrative,
let me find the facts.
Rather than these are the facts,
let me try and substantiate and find the narrative.
And in the world of geopolitics,
one also can't oversimplify how connected the world is,
how complex these issues are,
and how different nations have different
prouder asymmetries that plays itself out
at a geopolitical nation-state level.
But at the end of the day,
here's what the lesson of history is.
Where people have a point of view,
a dream for which they're building,
a vision that they believe in,
leaders who are willing to take them there
and are willing to hold each other accountable,
they get it done.
It's that simple.
And I think we have to ask and answer the question,
have we ticked all five of these boxes?
One of the challenges I think we have in South Africa,
again, I've said this publicly,
I think there's a divergence of what is the vision
for the country.
And you know, as a father,
you can't run a family without a vision.
You certainly can't run a community without a vision.
You can't build a society without a vision.
So forget trying to build a country without a vision.
And I think if you went to 10 different South Africans
and said, what's your vision for this country
for the next 20 years?
The answers might differ.
I spent a lot of time in many parts of the world.
I just came back from the Middle East.
I was just in the UAE.
If you ask in Emirati,
what is the vision for the United Arab Emirates?
The answer is clear.
Whether they're working in government office
or are high up in the echelons of business,
it's the same single answer.
My view is that they must come at a time
when as Africans, we draw a line
on who we blame for our past.
And we go from this point forward,
we're going to talk about who's accountable for our future.
And I have not yet.
And you've got to look in the mirror
and you're accountable for your future.
And this is the point I was going to make.
I have not yet seen a record of history
where people have built a future
by obsessing over who pained them in the past
and getting stuck there.
Now, it's important to have those conversations.
It's important to clear that up.
It's important to have true reconciliation
and nation building.
This is an example of what Africa brings
to the rest of the world.
Don't pretend that stuff doesn't exist.
That's why we had the Truth and Reconciliation Commission.
Sit around the table, talk about who pained whom,
who hurt whom, and why that matters.
All of those things are important.
And then there's a time when you draw the line of the sand
and say, right, now how do we build for the future?
Let's go get them.
And recognize, and then lastly, one last thing,
recognize that there's never been a time in history
where a full population of a country started from the same point.
I accept my disadvantage as a young black person
growing up in a township in South Africa.
I also accept that I'm not as disadvantaged
as a young black female growing up in a rural part
of the northern provinces
who didn't go to a Model C school like I did.
I accept that I have more privilege than her.
And I accept that in the classes where I sat,
if you were a young white person,
you come from a different background
and you were more privileged than I.
I accept it, but then I draw a line in the sand
and then I say, right, now that I've accepted it,
let you and I go to the marketplace of competition
because I'm going to show you.
Let's write the exam.
Let's see who's going to get the better marks.
Let's do the competition.
And I think if we take on that spirit of conquest,
of competition, of personal agency,
this is how greatness is built
and this is how countries achieve for greatness.
Is family big and important in South Africa?
Family is big.
Family is important.
But like everywhere in the world,
the institution of family is also under attack.
I'm a believer and so I have my own personal view
about what's happening spiritually
and why I think that is.
But it's a lot of...
The way I try to explain the sometimes of the psychology,
if you want to understand is a lot of...
And this is what I think the United States
does not yet fully appreciate.
The United States is still the megaphone of the world.
It is the largest exports coming out of the U.S.
are not any of the projects you produce.
It's the media you create.
There are people all over the world
who've never been to the U.S.
but no rap music.
And they can recite every single line
by every single rap musician.
If you want to be huge in music,
in arts and entertainment,
where you've got to make it is the U.S.
That's why they say in New York,
if you make it there, you'll make it everywhere.
If you want to work in capital markets today,
what's the place you want to go to?
It's still Wall Street.
And so for those of us in emerging and frontier markets
and please my countrymen hear me,
I'm not trying to belittle who we are
and what we contribute to the rest of the world.
But you can't argue still that the vantage point
from which the U.S. transmits its message
is just levels and levels above the rest of the world.
The problem then is when the U.S.
also transmits messages that often are
counter the narrative of what is accepted
in particular countries and their cultures
that also permeates.
So when the U.S., for instance,
starts seeing things such as
maybe family is not that important,
that permeates.
When the U.S. says things such as maybe a belief
in a creator is not important, that also permeates.
And I think to understand where we are,
you often have to understand the messages
that the U.S. is sending to the rest of the world
and the U.S. has to understand
that those messages do have implications.
I think you're absolutely right.
As a U.S. citizen, as I travel around the world,
they find out I'm U.S.
they get a smile on their face.
Oh, I can't wait to come to the U.S.
or I was in your country one time.
Where did you go?
Which is always New York or California?
That's right, yeah, yeah.
That's where it is.
East-West.
Yeah, so...
And by the way, just on that,
it's interesting how most people
don't travel into the middle part,
which is real America, right?
That's a real way the U.S. is.
Yeah, that's where we're from.
So how does Africa, as a continent,
stack up today?
I mean, we're talking frontier markets,
but what's the prognosis
as far as you're concerned?
Should I be thinking about investing?
What's going on?
It's investment 101,
and you're a lot more experienced
in the industry than I am,
to always balance out your risks
and balance out your portfolio.
So once you've taken on the necessary
positions and risks
in more developed markets
and spaces you understand,
should you be looking at frontier markets?
The answer is yes,
because they do present,
I think, a well-priced opportunity.
Should you be looking at Africa?
Of course I want to say yes,
because that's our space,
that's where we operate,
that's home for us,
and we genuinely believe in the people.
What's the prognosis?
The stats are out,
and we were discussing some of them
during conference,
which is the growth of urbanization rate,
the growth of people getting access,
for instance, to power and electricity,
that skyrocketing,
the youth urbanization rate,
the number of young people
coming into the system,
all of those, the macros,
are in place, right?
I would say though,
if you're a global investor
taking a view on whether or not
I should be in Africa,
as I said today,
I gave those three tips.
The first tip is,
get a local partner,
because you need somebody
who's going to walk the path with you,
because it's an exciting,
but treacherous path,
and you want to be there
with people who are going to play
the long-term game with you,
and that's the strategy,
often, that we take.
The second is,
have a time horizon
that is consistent with the environment
that you are operating in, right?
This is,
there are still many parts
of particularly in frontier markets,
not as much in the emerging parts
of the continent,
but there are still many parts
of the continent,
for instance,
where liquidity is a challenge.
So, getting into an asset
might be easy,
getting out becomes a problem,
and there aren't a lot of players
to whom you can exit,
and so you're really hoping for,
you know, an exit or a public,
public exchange,
or an exit in other parts of the world,
and that presents its own time horizons.
And then third,
I think I would say,
do it in the spirit,
in the right spirit,
do it to truly work
with the local people,
build and develop and recognize
that you will have an impact
beyond the balance sheet.
And so you've got to be driven
by wanting to have an impact
beyond the balance sheet.
For us,
we're mission led
in how we engage
with partners and investors.